What Is Ethereum And Who Is Vitalik Buterin?
What Is Ethereum And Who Is Vitalik Buterin? Ethereum was the idea of a computer programmer named Vitalik Buterin. In 2014, he published a white paper and introduced it to the world. The Ethereum platform was created by Vitalik Buterin and Joe Lubin, founder of ConsenSys, a blockchain software development company.
A Quick Revision On Previous Modules.
Before We Start “What Is Ethereum And Who Is Vitalik Buterin?”, let’s begin with a reminder of some of the information learned from the previous modules.
Cryptocurrencies are digital currencies. They aren’t backed up by any government and they don’t use a central bank. Cryptocurrencies allow you to transfer value between people without the involvement of a third party.
Cryptocurrency was invented back in 2008, when a person called Satoshi Nakamoto released his white paper explaining the idea of blockchain technology. The paper explained how bitcoin could work and why he believed that there were problems with the current financial system.
Satoshi then went on to develop Bitcoin into what we know today. He started this project by writing code for a program which would solve all the issues with using traditional banking systems to make payments online. This program was actually a new form of digital currency called Bitcoin, which has become extremely popular and is now worth billions of dollars.
The cryptocurrency market has seen huge growth in the past few years. The Bitcoin market capitalization has been on a steady climb since the beginning of 2017 and has hit an all-time high of over $1000 billion USD (United States Dollars) in market cap.
Ok, now the revision is done, it’s time to proceed.
This module will introduce you to the creator of Ethereum and teach you about the Ethereum 1.0 network (we’ll cover Ethereum 2.0 later), it’s token Ether (ETH), and how they are an integral part of non fungible tokens, decentralized finance, decentralized autonomous organizations, and the metaverse.
Who Is Vitalik Buterin?
Vitalik Buterin was born in Russia in 1994. At the age of 6 his family moved to Canada.
Very early on in his school life, his parents and teachers realised he was naturally gifted in mathematics. He then attended a private school in Toronto, Canada.
His experiences there led him to develop a thirst for knowledge and an intense desire to change things that he saw had flaws.
Buterin earned a bachelor’s degree in mathematics from the University of Waterloo in 2010, and then studied computer science and cryptography at the University of Waterloo.
In 2014, Vitalik Buterin received a Ph.D. in computer science for his thesis titled “A flexible and scalable framework for decentralized applications”.
Also in 2014, he published a white paper on Ethereum and introduced it to the world.
Soon afterwards, the Ethereum platform was created by Vitalik Buterin and Joe Lubin, founder of ConsenSys, a blockchain software development company.
In 2015, the Ethereum Foundation was founded by Vitalik Buterin, Joseph Lubin, and many other influential and forward-thinking people who foresaw that Ethereum could be used for much more than just virtual payment (digital currency) technology.
Since Ethereum was launched, Ether has soared to become the second largest cryptocurrency in the world by market value. It is second only to Bitcoin.
What Exactly Is Ethereum?
Ethereum is an open-source software platform that allows anyone to build and run decentralized applications (dApps). Ethereum provides developers with a decentralized programming environment, which means that developers no longer need to rely on centralized intermediaries.
The Ethereum network has been growing rapidly and it is expected that it will be the platform of choice for developers and enterprises. This has led to the rise of Ethereum-based tokens, such as ERC20 tokens, which have the potential to become the next generation of financial assets.
Ethereum is a blockchain-based platform that allows for the creation of smart contracts. Smart contracts are computer programs that can automatically execute and enforce the terms of a contract between two parties.
Ethereum is a decentralized platform for applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third-party interference. It uses blockchain distributed ledger technology to create new economic models and user experiences that we have never seen before.
How Exactly Does Ethereum Work?
Ethereum’s white paper was one of the first to explain how the blockchain could be used to create decentralized applications (DApps) that would allow users to access them via the internet. DApps are applications that run on top of a blockchain network and can be used to create a decentralized version of your favorite website or application.
Ethereum is an open-source, public blockchain network which enables smart contracts and decentralized applications. Ether was created to power this platform and is the fuel that keeps the Ethereum network running.
These next 4 sub topics explain the various components in more detail.
How Does Ethereum Use Blockchain Technology?
Ethereum is a platform that allows people to run decentralized applications (DApps). These DApps are written in a programming language called Solidity, which runs on Ethereum’s blockchain. The blockchain stores the transactions and data for all of the applications that use it. It is not controlled by any one person or company, but rather the community of users who run it.
The Ethereum blockchain electronic ledger records all of the transactions in this peer-to-peer network. This means that it is decentralized and is not controlled by any one person or group of people. The Ethereum blockchain is distributed across a network of computers. The ledger is immutable (unchangeable) and can never be changed. The system has been proven to be extremely reliable and secure.
Ethereum is an open-source, public, blockchain based distributed computing platform featuring smart contracts. It uses a proof-of-work consensus algorithm called PoW, which means that miners use their computers to solve complex mathematical equations. The miner that solves the equation first gets to add a new block to the chain and earn rewards in Ether, the native currency of the Ethereum network.
Mining For Ethereum
Crypto currency mining is an interesting topic and one that is changing the face of the crypto currency market. Mining is done by individuals or companies that mine the blockchains for cryptocurrencies.
In order to mine for ETH, you need an ASIC miner. This type of hardware can cost $100s or $1000s of dollars. However, you can also use a GPU instead of an ASIC to get the job done.
A GPU is much cheaper than an ASIC. It’s designed to handle graphics processing rather than crypto mining. You will still have to pay for electricity, but it won’t be nearly as expensive.
When mining is done on a large scale the operation is then called a “Mining Farm”.
What Is The Proof-of-Work Protocol?
The Ethereum blockchain is a digital ledger that records transactions between two parties. Up to September 2022, in order to do this, transaction validation required computing power from the network users, using a process called ‘Proof of Work’ (PoW). Those users who dedicated their computing power are called ‘Miners’ and are paid in Ether (ETH) cryptocurrency.
Proof of work (PoW) is a way to ensure that only legitimate transactions are recorded on the blockchain. This prevents fraud and the creation of fake currencies. PoW is based on the concept of a computational puzzle, which can be thought of as a series of steps that must be completed in order for a transaction to be valid. In Bitcoin, this is done with a cryptographic hash function, which is used to generate a number.
The term “proof of work” refers to a method of securing a network, in which the nodes verify each other’s computational effort.
PoW is a cryptographic technique for authenticating messages. It is used to secure digital currencies like Ethereum and Bitcoin and is an important part of these network protocols.
Proof of Work (PoW) requires an amount of effort in order to deter frivolous or malicious uses of blockchain networks. This can result in large amounts of electricity consumption.
The idea for the proof of work came from Hal Finney in 2004. It was then adapted to securing digital currency by Satoshi Nakamoto in 2009, who used the SHA 256 hashing algorithm (a method for verifying and securing transactions on a blockchain) for this purpose.
Bitcoin became the first system to make wide use of Finney’s PoW idea (Hal Finney also the first ever recipient of a Bitcoin transaction on the Bitcoin Blockchain). Proof of work forms the basis of many other cryptocurrencies as well, allowing for secure, decentralized consensus.
As of September 2022, Ethereum now uses a more advanced method of validating transactions and securing the network.
It is called Proof Of Stake.
What Is The Proof-of-Stake Protocol?
Proof Of Work (PoW) requires a lot of electrical power. This makes it more expensive to run Ethereum.
Ethereum is currently moving to a Proof-of-Stake (PoS) consensus protocol. This will mean that Ethereum network users will have the opportunity to earn Ether (ETH) by staking their Ether.
This will be a different kind of mining because instead of having participants expend electrical power to compete for the rewards, participants or validators now loan their Ether to the network in order to participate.
PoS is a way of validating transactions on the blockchain while using a lot less energy.
The validator (formerly known as a miner) is responsible for keeping track of the block chain. This means that the validator must maintain a blockchain database that contains all the transactions that have taken place in the system.
Instead of receiving a reward proportional to the amount of work they have done, validators now receive a reward proportional to the amount of ETH stake they hold.
Ethereum software developers (programmers) have been working on the Proof of Stake system for years. That is because PoS is a lot more complicated than PoW.
The developers are now ready to integrate Proof of Stake on the Ethereum Mainnet (main network). They are calling this integration ‘The Merge’ and they are actively working on it with the Ethereum community of users and enthusiasts.
UPDATE: The Merge was completed on 15 September 2022.
To Summarize Proof Of Stake Protocol:
A PoS blockchain is a decentralized network that uses the concept of proof-of-stake instead of proof-of-work to reach consensus (validation agreement). The network rewards those participants who lend their ether as collateral to secure the network.
Proof of stake has a number of improvements to the proof of work system. They are very detailed and technical and there is no need to explain them in this part of the course.
An Ethereum wallet is a place where you store your Ether Crypto Currency (ETH). Even though it is called a wallet and most people think the ETH is stored ‘in’ the wallet, the actual ETH is stored on the Ethereum Blockchain and the wallet acts as an interface between you and the Blockchain. It is similar to a safety deposit box at a bank where you can keep your cash.
However, with the ether stored on the blockchain, the funds are available to anyone with access to your wallet.
If you lose your password or your seed phrase to your wallet, then you lose everything. Also if a malicious person is able to access your password or seed phrase, you could lose everything stored in your wallet.
When you send Ether from one wallet address to another, you are initiating a transaction. In order to complete the transaction, you must have access to the public key for the wallet you are sending to. Your wallet is the safe that holds your private keys.
When you are being sent Ether, you must provide the sender with your public address for them to send the Ether to.
When you generate a new wallet, you get a new set of private keys, and you can create a backup of those keys on a USB drive, a cloud storage service, or some other type of storage. These must be stored in a safe and secure place.
Ethereum Classic And Ethereum Split
In 2016 there was an incident in which $50 million of Ether was stolen. This money had been raised for a project called ‘The DAO ‘.
The incident led to the Ethereum community’s decision to hard fork (split the Ethereum network) in order to protect users’ funds. The split created two separate blockchains, Ethereum and Ethereum Classic.
The Ethereum network now has two versions: the original Ethereum blockchain and the Ethereum Classic blockchain.
If a transaction takes place on the Ethereum blockchain, it is recorded in the Ethereum blockchain. The Ethereum Classic blockchain is the original version of the Ethereum blockchain, however since 2016 it has a different set of transactions recorded.
Ethereum vs. Bitcoin. Which Is Better?
Bitcoin is a cryptocurrency and a payment network. The most well-known use for Bitcoin is as a currency, but it can also be used as a payment network for online transactions.
Bitcoin is a decentralized digital currency that allows users to transfer money online. It is not backed by any government or central bank, so it is entirely digital. Because it is completely digital, it cannot be manipulated by any government or central bank. Bitcoin is not tied to any one person or group of people. It is a peer-to-peer system that operates without any oversight. The Bitcoin blockchain was only created to support the Bitcoin currency.
Ethereum and it’s network is is an ambitious blockchain project (described as the world’s programmable blockchain) that’s aiming to utilize blockchain technology for many diverse applications. Bitcoin was designed strictly as a payment method.
There is a cap on the total number of Bitcoins that will ever be created (21 million).
There’s no limit to how much Ether can be created, though the processing time that blocks take to mint limits how much can be created each year. At the time of writing this module, there is a total number of approximately 120 million Ether coins in circulation.
A major difference between Ethereum and Bitcoin is how each network manages transaction fees. The fees associated with Bitcoin transactions are paid directly to the miner who validates the transaction. Transaction fees are called ‘Gas’ on the Ethereum network and are an additional fee, which is paid by all participants in transactions. Ethereum miners recieve these transaction fees in addition to mining rewards.
One way that Ethereum and Bitcoin are similar is that both blockchain networks consume huge amounts of electricity. That is because they both use the Proof of work system to ensure the transactions in a blockchain are valid.
What Does Ethereum’s Future Look Like?
The proof of stake protocol will allow the Ethereum network to scale by allowing users to validate transactions and mint new ETH based on their ether holdings. This will allow Ethereum to grow significantly in terms of transaction volume and capacity.
In addition to this, using the Proof Of Stake protocol will also help to address chronic network congestion issues, that have can cause the Ethereum network gas fees to become very high.
Ethereum is being adopted all around, especially by large-scale organizations.
In 2020, AMD, the largest manufacturer of integrated circuit chips, announced a joint venture with ConsenSys to build an Ethereum network of data centers.
In 2015 Microsoft partnered with ConsenSys, to develop Ethereum Blockchain as a Service (EBaaS) technology on Microsoft’s Azure cloud platform.
Web3 And Ethereum
A new version of the World Wide Web called Web3 is an idea which uses concepts such as decentralization, blockchain technologies, and token-based economics.
Web3 is still a concept, but it is generally theorized that it will be powered by Ethereum because many of the applications being developed use it.
Gaming And Ethereum
The company Decentraland has created an online platform that allows users to create their own virtual worlds and build them using a web browser. You can use this platform to create your own metaverse playgrounds that are connected to the Ethereum blockchain.
Users can then sell these virtual assets to other users or use them as a way to monetize their creations.
The list of Ethereum based games is constantly growing. For further research check this list HERE.
Ethereum And Non-Fungible Tokens
NFTs are a new way to create digital assets. The easiest way to understand them is to think of them as digital collectibles.
Although they can be built on other platforms such as the Binance Smart Chain, at the moment the Ethereum network is the network of choice to launch and host NFTs.
We don’t need to go into NFTs now as we have a whole module on them coming up.
The Advent And Advancement of DAOs
A DAO is an organization where everyone has an equal voice. It is the way that we can create a system where all members have a say in how a company is run.
A DAO is a group of people who have the power to make decisions about the future of the organization.
DAOs (Decentralized Autonomous Organizations) are becoming more popular in the cryptocurrency community. This is because they are a way for groups of people to create and run their own projects and organizations without having to rely on a central authority.
Because DAOs will often use Smart Contracts, Ethereum will play a major role in their advancement.
Wow….this module is revealing. So.many thing are going on, the existence of crypto has been there, and is being brought back letting us know that we can handle our own business and stuffs without the interference of anyone.
A decision is cooking in my mind…
Great feedback. Thanks. What decision do you have cooking….?
Everything a beginner needs to know about Ethereum is revealed in this module. Ethereum really has a future.